Undo Transformation is a preset from the Layer Manager bundle. It helps you to restore smart objects and text layers that have been transformed.
Rectify Smart Object
Smart objects will be reset to their original size. Any non-destructive deformation and transformation will be undone, such as flipping, rotating, skewing, distorting, warping, perspective changes and scaling. Smart filters remain. Rectifying can lead to visual changes caused by smart filters.
Rectify Text Layer
Any non-destructive deformation and transformation will be undone for text layers. Including flipping, rotating, skewing and deforming. Proportional scaling will remain. Anti-proportional scalings will be reset based on the text height.
Locked layers will be avoided. If you also want to rectify locked layers, you have to activate this option. A layer is only locked when everything is locked. Should, for example, only transparent pixels be fixed or the position locked, the layer is not considered locked. Layers that are in locked groups are also not considered locked. In this article from Adobe you will learn more about fixing layers.
All settings can be saved as Custom Presets and accessed easily at any time. Read more about Custom Presets in this article.
You can only create this presets. Read more about the Create Button in this article.